November 25, 2008

“We have only two things to say about Tim Geithner, who we do not know: A.I.G. and Lehman Brothers,”
said Christopher Whalen of Institutional Risk Analytics. “Throw in the
Bear Stearns/Maiden Lane fiasco for good measure,” he said.

“All of these ‘rescues’ are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion.”

Ouch.

“He
was in the room at every turn of the crisis,” said another executive
who participated in several such confidential meetings with Mr.
Geithner. “You can look at that both ways.”

Most interesting is Sorkin's take on Geithner's role in the decision to let Lehman go bankrupt:

Perhaps what has most people on Wall Street stirring is Mr.
Geithner’s role in the fall of Lehman. At the time of its bankruptcy,
he, along with Mr. Paulson, appeared to be the most vocal in supporting
the government’s refusal to bail out the firm, according to people
involved in various meetings. With hindsight, many in the financial
industry blame a deepening of the global financial crisis on the government’s decision to let Lehman crumble.

Perhaps
not surprisingly, there have been moves afoot in recent weeks by some
in the New York Fed and Obama team to put distance between Mr. Paulson
and Mr. Geithner, whose salary was $398,200 last year and who will take
a pay cut to $191,300 in his new role.

These include the
suggestion that Mr. Geithner was not in league with Mr. Paulson over
Lehman; that Mr. Geithner pressed to save the firm from bankruptcy;
that he was a lone voice on the subject and was overruled by Mr.
Paulson and Ben S. Bernanke, the Fed chairman, on this issue.

The validity of this new claim is hard to verify. The New York Fed declined to comment.

Many
executives suggest it may be a bit of revisionist history. “If that’s
true, he did a good job of hiding it,” said one executive who spent the
weekend at the New York Federal Reserve the weekend of Lehman’s fall.

It's hard to know what's true here. I have a lot of faith in and respect for the judgment of those (like Noam) who are hailing the Geithner selection. It's also possible that the Wall Street people talking smack about Geithner to Sorkin are only doing so because Geithner isn't a Wall Street guy. At the same time, I'm racking my brain to recall the choice of any recent Treasury Secretary that has elicited anything but praise. After all, it was only two years ago that Henry Paulson's decision to leave Goldman to come to Washington was being celebrated as a coup for the Bush administration.

Maybe it's a sort of Master of the Universe syndrome: to even be considered for the top job at Treasury, a person has to have had outsized success in the realm of economics or finance, so we all just sort of assume that success will carry over to government. Sometimes it doesn't. I really hope that, in Geithner's case, it does.